The Local Convenience Store Makes Personal Pan Pizzas

question 22

Essay

The local convenience store makes personal pan pizzas. Currently, their process makes complete pizzas, fully cooked, for the customer. This process has a fixed cost of $20,000, and a variable cost of $1.75 per pizza. The owner is considering a different process that can make pizzas in two ways: completely cooked (as before), or partially cooked and then flash frozen, for the customer to finish at home. This alternate process has a fixed cost of $24,000, but a lower variable cost (because much less energy is used in baking) of $1.25 per pizza.
a. What is the crossover point between the existing process and the proposed process?
b. If the owner expects to sell 9,000 pizzas, should he get the new oven?

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Definitions:

Brake Pedal

A component in vehicles that the driver presses with their foot to activate the braking system, reducing or stopping vehicle movement.

DOT 3

A type of brake fluid specified by the Department of Transportation, characterized by its boiling point and chemical composition suitable for standard braking systems.

Rubber Master Cylinder Cap Seal

A rubber seal located on the cap of a master cylinder in a hydraulic system, designed to prevent leakage of brake fluid and contamination from entering.

Brake Fluid Contamination

Occurs when unwanted substances enter the brake fluid, potentially causing brake system failure or reduced performance.